20150204Nesbitt Direct.pdf

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BEFORE THE IDAHO PUBLIC UTTLITIES COMMISSION
IN THE MATTER OE IDAHO POVf,ER
COMPANY, S APPLICATION EOR
APPROVAL OF NEW TARIEF SCHEDULE
82, A COMMERCIAL AND INDUSTRIAL
DEMAND RESPONSE PROGRAM (FLEX
PEAK PROGRAM).
CASE NO. IPC-E-15-03
IDAHO POWER COMPANY
DIRECT TESTIMONY OF
QUENTIN NESBITT
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O. Pl-ease state your name and business address.
A. My name is Quentin Nesbitt and my business
address is L227 West Idaho Street, Boi-se, Idaho 83702.
O. By whom are you employed and in what capacity?
A. I am employed by Idaho Power Company ("Idaho
Power" or "Company") as the Energy Efficiency Program
Leader in the Customer Relations and Energy Efficiency
Department. I am responsible for overseej-ng the Company's
Commercial and Industrial (*C&I") and Irrigation Demand-
Side Management ("DSM") programs. f am directly
responsible for the operation of the Company's C&I demand
response program.
o.Pl-ease descrj-be your educational background.
A. I earned a Bachelor of Science degree in
Agricultural Engineering from the Universj-ty of Idaho in
1989 and received my Professional Engineering l-icense in
7992.
O. Please describe your work experience with
Idaho Power.
A. I began my employment with Idaho Power in 7991
as an Agricultural Representative in the Company's Energy
Management Department where I was responsible for providing
customer servj-ce to irrigation and agricultural customers.
Later in 1997, I was promoted to an engineering position
where I provided technical support for Idaho Power
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Idaho Power Company
1 Agricultural Representatives. This involved DSM program
2 design and operation, pump testing, new service requests,
3 investigation of high bi11s, and irrigation system
4 eval-uatj-on and consultation. In 2002, the department was
5 reorganized as the Customer Relations Department and I took
6 on additional- duties as the agricultural customer segment
7 advocate/expert where I coordinated Company activities that
8 affected agricultural customers. In October of 2074, T
9 accepted my current position as an Energy Efficiency
10 Program Leader.
11 O. What is the purpose of your testimony?
L2 A. While Company witness Ms. Tami Whj-te's
13 testimony describes the history of the Company's C&I demand
14 response program, stakeholder input received, cost-
15 effectiveness and recovery of program expenses, my
16 testimony explains the program design of the Company's
tl proposed internally-managed C&I demand response program.
18 O. Please provide a summary of your testimony.
19 A. My testimony will describe: (1) the Company's
20 proposed program design, (2) the differences between the
2t EnerNOC, Inc. ("EnerNOC") program and the Company's
22 proposed internally-managed program, (3) the customer
23 benefits of a Company-managed program, and (4) the
24 risks/mitigations associated with a Company-managed CtI
25 demand response program.
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Idaho Power Company
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PROPOSAL FOR COMPANT-IIA}IAGED ELEX PEJAK PROGR.EM
O. Please describe the FIex Peak Program ("F1ex
Peak" or "Program") Idaho Power proposes to offer and
directly administer.
A. The Fl-ex Peak Program is a voluntary demand
response program for the Company's C&I customers who are
willing and able to reduce their el-ectrical energy loads
for short periods of time during summer peak days. As set
forth in Schedul-e 82, Flex Peak Program ("Schedule 82"),
which can be found as Attachment 1 to the Application, the
proposed Program will be available to C&I customers taking
service under Schedules 9, 79, or a Special Contract. The
Program will- be promoted to past C&I demand response
program participants and, as explained more ful1y in
Schedule 82, those customers who intend to participate will
be required to file an application with the Company prior
to the start of each Program season. The Program season
will run from June 15 - August 15. Program events wiII be
called only between the hours of 2:00 p.m. 8:00 p.m.,
Monday through Friday excluding holidays. Program events
may last 2-4 hours per day and wil-I not exceed 15 hours per
cal-endar week and 60 hours per Program season.
Participants will be notified two hours prior to a Program
event. A minimum of three Program events per season wiII
be cal-Ied. The incentive structure includes both fixed and
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1 variable payments. In the event of a system emergency,
2 parLicipants may be call-ed to voluntarily reduce their
3 load.
O. Please briefly describe the incentj-ves that
5 would be avallab1e to Elex Peak Program participants.
6 A. The proposed fixed payment wil-I be equal to
7 $3.25 per kil-owatt (\\kW") per week muJ-tiplied by the amount
8 of actual kW reduction received during a Program event or,
9 in the absence of a Program event, the actual kW reduction
10 will- be equal to the nominated kW.
11 The proposed variable payment will be equal to $0.16
72 per kilowatt-hour ("kwh") reduced, effective after the
13 first three Program events have been called for the Program
74 season.
15 The kW reductlon will- be calculated from a baseline
16 using the three highest average participant non-event load
L7 days in the prior 10 days before an event day.
1-8 Payments to participants will be in the form of a
19 check distributed within 30 days of the end of each Program
20 season.
27 II. COMPARTSON OF PAST AI{D PROPOSED EI.EX PEAK PROGRJAMSi
22 O. How will Idaho Power's Flex Peak program
23 differ from the EnerNOC-managed ElexPeak Management
24 program?
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A.WhiIe there are several- small differences,
one major difference wil-1 be that EnerNOC monitored the
l-oad reduction of each participating site during a program
event and if needed cal-Ied participants to provide coaching
in order to get their overall load reduction to equal the
nominated amount. In order to facilitate this process,
EnerNOC provided equipment at each participant site and
provided participants with access to a website where those
participants could view their real-tj-me usage data.
In anticipation of possibly administering the
program internally, the Company informally surveyed 25
customers that recently participated in the third-party
managed FlexPeak Management program and asked them how they
might respond to a change in the way the program was
designed and managed. The responses generally indicated
those customers woul-d 1ike1y participate even if the
program changed and they were not provided with the same
monitoring and coaching services that EnerNOC provided.
Customers indicated that whife some used the EnerNOC data,
the coaching and visibility to usage data was not necessary
to secure their participation.
Subsequently, some customers provided feedback to
the Company regarding the design of the Program, some of
which the Company has been able to incorporate, such as the
ability to aggregate metered sites, the minimum kW of load
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reduction required for participation, and the timing of
j-ncentive payments.
At this time, the Company does not plan to provide
equipment to participants that will allow them to monitor
their load reduction or have access to a websj-te where they
could view their real-tj-me load data. Eurther, fdaho Power
does not plan to provide coaching during Program events.
The Company plans to dj-scuss opti-ons with individual
customers who are interested in participating in the
Program but do not currently have visibility to their real--
time Ioad data to explore installing equipment that would
provide such visibility.
III. CUSTOMER BENEFITS
O. What are the benefits to both the Flex Peak
Program participants and the Company of a Company-managed
program?
A.There are several benefits to participants
of a Company-managed program. First and as more fully
described in Ms. White's testimony, the Company has
identified cost savings per kW of l-oad reduction if it
internally manages the FIex Peak Program. Second, the
Company has repeatedly heard from customer groups such as
the Industrial Customers of Idaho Power that they would
val-ue increased transparency regarding the terms of the
agreement between a third-party provider and the
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particlpating customers If the Company offered a program,
each participating customer would be required to adhere to
the terms and conditions j-dentified in the publically
avail-able tariff schedul-e and receive consistent i-ncentive
payments for doing so. Lastly, the Company welcomes any
opportunity it has to cross-market energy efficj-ency
programs and strengthen the communication and relationship
with its customers directly.
o.Do customers that do not participate in the
program benefit?
A.Yes. The cost savi-ngs will be passed on
directly to the entire body of customers, both participants
and non-participants. Non-particj-pants also benefit from
the increased transparency afforded by an Idaho Power-
managed program with an associated tariff schedul-e.
IV. COMPA}IY-I{AT{AGED PROGRAM RISKS AT{ID MITIGATION
o.Did the Company consider the risk that program
participation levels might decrease if Idaho Power managed
the program internally?
A.Yes. As described earl-ier in my testimony,
in an effort to quantify and understand this risk, the
Company solicited input from a subset of customers in an
informal- survey.
While the Company believes it is reasonable to
expect that changes in the Program may result in some lost
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participation, the Company also believes it is reasonable
to expect it will enroll new participants into the Program
as well and, over time, that it wil-l- be able to achieve
participation l-eve1s that are similar to current levels.
Additionally, an Idaho Power-managed program may provide an
opportunity for smaller customers to participate those
who may not have been accepted under a third-party
aggregator model.
o.Did the Company assess the risk of actual
load reduction differing from nominated levels?
A.Yes. The Company believes there is a risk
of actual load reduction being less than the nominated
levels. In order to mitigate that rj-sk, the Company has
included j-n the Program a downward adjustment to the
fj-nancial incentive received by the participant to
discourage non-performance.
0.How does this compare with the risk that
exists under a third-party aggregator model?
A.The risk is the same; however, from the
utility's perspective, under a third-party administrator
model, the downward fj-nancial adjustment is made to the
third party rather than directly to the participant, as
will- be the case with the Company-managed program. In
ej-ther case, the utility and its customers are protected
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Idaho Power Company
1 financially from the risk of actual load reduction
2 dif feri-ng f rom nominated leveIs.
O. Did the Company contemplate how this risk
4 could be mitigated?
A. Yes. Initially, the Company plans to
6 mitigate the uncertainty by including most, but not all the
7 total Nominated kW into its forecast of available demand
8 response resources. Once the Company has had time to
9 analyze the variability in Nomj-nated kIr'I and achj-eved kW,
10 the forecasting will improve. Additionally, the Company
11 believes the Nominated kW Incentive Adjustment (as
12 explained in Schedule 82) wiII incent partici-pants to
13 provide at least the load reduction they nomj-nated in any
74 given week.
15 O. How wj-Il the Company ensure that it is not
76 paying for load reduction that was not achieved?
L7 A. The incentive calcul-ations proposed in
18 Schedule 82 ensure that a particj-pant is only paJ-d for
L9 demand reduction achieved based on actua] meter data. If a
20 particlpant does not meet its Nominated kW during a given
2L hour within a Program event, the participant wiII be
22 subject to a Nominated kW Incentive Adjustment, which
23 reduces the amount of incentive payments that can be
24 received, but in no event would result in the participant
25 owing money to the Company.
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O. Do you believe the Company can have a system
in place to calculate and deliver i-ncentive payments prior
to the 2075 Program season?
A.Yes. The Company already has systems and
processes in place to quantify and deliver incentive
payments for the approximately 350 MW of demand response it
receives from its residential and j,rrj-gation programs, and
it wil-I model- the new system similarly. As I mentioned
previously, incentive payments will be distributed within
30 days of the end of the Program season.
O. Can the Company have a fu11y operational
Program by the start of the June 15th demand response
Program season?
A. Yes. If Idaho Power receives Commission
approved tariffs by May 7, 2015, such that it has 45 days
to sol-icit participants, the Company believes that it can
implement the Program by June 15, 2075.
A. Will the Company need to hire additional
staff or incur increased Idaho Power labor-related program
administration costs to implement and manage the Flex Peak
Program?
A.No. The Company has a program specialist
who was responsible for overseeing the EnerNOC-managed
program, and that posi-tion will contj-nue to be responsible
for the oversight of the Company-managed Program. Further,
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the Company will leverage its existing customer
representatives to promote participation and field
questions about the Program. These representatives engage
with the Company's C&I customers on various issues in the
normal course of their work, so discussing the FIex Peak
Program with customers will not require additional-
resources.
O. Does fdaho Power anticipate other Program
administration costs to increase as a result of managing
the Program in-house?
A. Yes. While the overall cost of the Program
will- be lower, the Company's cost to administer the Program
wil-I be higher due to creating and maintaini-ng software to
calculate participant incentives.
O. Do you believe Idaho Power can operate and
manage the Flex Peak Program itsel-f rather than through a
third-party provlder?
A.Yes. Idaho Power has the ability and
resources to manage the Program and can do so at a fower
cost than the third-party contractors that responded to the
Company's Request for Proposals.
O. Does this concl-ude your testimony?
A. Yes, it does.
NESBTTT, Dr 1l_
Idaho Power Company
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STATE OF IDAHO
County of Ada
SUBSCRIBED AND SVIORN
February 2015.
ATTESTATION OF EESTIIIONY
to before me this 4th day of
My commission expires:
ss.
Tt Quentin Nesbitt, having been duly sworn to
testify truthfully, and based upon my personal knowledge,
state the foJ-lowing:
I am employed by Idaho Power Company as an Energy
Efficiency Program Leader in the Customer Relatj-ons and
Energy Efficiency Department and am competent to be a
witness in this proceeding.
I declare under penalty of perjury of the laws of
the state of Idaho that the foregoing pre-fil-ed testimony
is true and correct to the best of my information and
belief.
DATED this 4th day of Eebruary 201,5.
NESBITT, DI !2
Idaho Power Company
Quentin Nesbi
Notary PuQ{Jc for Idaho
Residing ail